A new defense giant is emerging in Europe. From a small company trading decommissioned Soviet military equipment to a multibillion-dollar enterprise, the Czech-based Czechoslovak Group (CSG) is now positioning itself as one of the new industrial champions of the Old Continent, with Italy also featuring prominently in its expansion plans.
Why it matters: Founded in 1995 by Jaroslav Strnad as Excalibur Army, the company was handed over in 2018 to his son, Michal, who has transformed it into a multinational group with more than one hundred subsidiaries and over 14,000 employees across Europe and the United States.
- Driven by record growth in recent years and a strategy focused on targeted strategic acquisitions and expansion, CSG represents a unique case in the European defense industry, a sector traditionally dominated by long-established Western European players. And this appears to be only the beginning.
In an exclusive interview with David Chour, Chief Operating Officer of CSG, Airpress, the aerospace industry magazine affiliated with Decode39 media ecosystem, delved into the intricacies of the company’s operations and strategic initiatives.
Q: CSG has been one of Europe’s most dynamic industrial groups in recent years. Between 2021 and 2024, revenues increased from approximately €600 million to more than €4 billion. What do you attribute this growth to?
A: Our growth has been driven by several factors working together. First, we have pursued a long-term strategy of building strong industrial capabilities rather than simply expanding our portfolio. We invest in manufacturing, technologies and people, while strengthening our position across the defence value chain.
- Second, CSG has been able to identify strategic opportunities and execute acquisitions successfully. We integrate companies while respecting their heritage, brands and expertise, enabling them to grow as part of a larger industrial ecosystem.
- Finally, our growth reflects the trust of our customers. For many years, we have been a reliable supplier to armed forces and security organisations around the world, delivering high-quality products on time and continuing to invest in innovation and production capacity.
Q: Since Russia’s invasion of Ukraine, the defense sector has experienced a level of expansion not seen since the Cold War. Do you believe this is a long-term trend? If so, why?
A: Yes, I believe this is a long-term structural trend rather than a temporary reaction to the war in Ukraine. Russia’s aggression has fundamentally changed Europe’s security environment, but the challenge is even broader. European countries are assuming greater responsibility for their own defence while remaining firmly committed to the transatlantic alliance.
- The war in Ukraine has also transformed military thinking. Armed forces are rebuilding ammunition stockpiles, modernising their land forces, investing in protection against drones, and introducing drones and precision-guided munitions on an unprecedented scale.
- Meeting these requirements requires not only new procurement programmes but also a much stronger industrial base. Europe must rebuild critical manufacturing capacities and secure resilient supply chains.
- At the same time, I firmly believe that Europe’s growing defence capabilities should complement, not replace, transatlantic cooperation. European and American defence industries are strongest when they work together.
Q: Europe has embarked on an unprecedented effort to strengthen its defense industrial base. Yet there is still a long road ahead. If you had to summarize the most important challenges facing the industry, what would they be?
A: The first challenge is rebuilding resilient European supply chains. In areas such as ammunition production, Europe cannot afford to depend on critical materials sourced from outside allied countries. This starts with basic industrial capabilities, including the production of nitrocellulose, TNT and other strategic materials.
- The second challenge is adapting to the realities of modern warfare. Just as armed forces are changing their doctrines, the defence industry must evolve as well. Europe needs to expand its ability to produce not only conventional ammunition but also drones, precision-guided munitions and affordable air-defence and counter-drone systems at scale.
- The third challenge is overcoming fragmentation. Europe’s defence industry remains highly fragmented. CSG’s own growth demonstrates one possible approach. We have built our group by integrating specialised industrial companies across NATO countries while preserving their expertise and identities.
- At the same time, we continue investing in entirely new capabilities. For example, we are building advanced smart factories in both the Czech Republic and the United States to manufacture propulsion systems for drones and guided missiles, supporting the next generation of defence technologies.
Q: In 2024, CSG acquired the U.S.-based Kinetic Group, effectively transforming your company into a transatlantic industrial group. At a time when the industrial policy debate is increasingly polarized between “Buy American” and “Buy European,” what is your position on this issue?
A: We strongly believe in the transatlantic partnership and in its further development. The argument that Europe should take greater responsibility for its own defence and invest more in its capabilities did not begin with the current political debate in the United States. It has been discussed for decades.
- At the same time, we consider the United States to be the most important defence market in the world. Compared to Europe, it has the advantage of not being fragmented among dozens of countries. But if you want to be successful in the U.S. market, you must manufacture there and create American jobs. Fiocchi itself is a good example of this. Although it is an Italian company, it operates on both continents and has two production facilities in the United States.
- The capacity challenge is shared by both Europe and the United States. After decades of reduced investment following the Cold War, neither side has sufficient industrial capacity in several critical areas, from large-calibre ammunition to air-defence missiles. Both Europe and the U.S. also need to build the capability to produce affordable air-defence and counter-drone systems, as well as offensive drones, at scale.
- We therefore do not see this as a choice between “Buy European” and “Buy American”. The real answer is cooperation. European and American defence industries are much stronger when they work together. Companies such as Palantir and Anduril are expanding in Europe, and there is no reason why European companies should not be active in the United States. The Pentagon is interested in agile, innovative players capable of delivering on time and on budget.
Q: Last year, CSG also acquired 100% of Fiocchi Munizioni and an 80% stake in Perazzi, both iconic companies within Italy’s industrial supply chain. What strategic value do Italy and these acquisitions hold for your industrial strategy? Do you intend to continue expanding your presence in the country?
A: Let me first clarify one point. Fiocchi is part of CSG and is an important member of our Ammo+ division, which focuses on small-calibre ammunition, alongside The Kinetic Group in the United States.
- Perazzi is a manufacturer of world-class shotguns for hunters and sport shooters, but it is not part of CSG. It is owned directly by Michal Strnad. This separation reflects our intention to keep CSG, as a publicly traded group, focused on defence industry activities.
- Italy is one of the cradles of European industry and has a strong and highly respected defence industrial tradition. For CSG, Italy is therefore a strategically important country. We want to have a long-term presence here, expand our footprint and create jobs.
- This applies not only to small-calibre ammunition through Fiocchi, but also potentially to our broader defence supply chain, including large-calibre ammunition. We are interested in growing in Italy, including through acquisitions, but of course I cannot discuss specific potential targets.
Q: Europe is looking to develop new continental industrial champions, and given your company’s growth in recent years, CSG is widely regarded as one of the leading contenders for that role. What are your plans for the future?
A: We are working hard to ensure that CSG’s impressive growth continues. One of our advantages is that our CEO, Michal Strnad, is also the majority shareholder. He has a strong personal commitment to the long-term development of the group and drives its growth.
- This ownership structure allows us to make decisions quickly, whether on strategy, acquisitions, investments or major contracts. At the same time, CSG is attracting experienced people from leading European and global defence companies, which further strengthens our ability to manage international growth.
- Looking ahead, we want to continue strengthening our supply chains and vertically integrating our production, especially in large-calibre ammunition and land systems. In parallel, we aim to accelerate significantly in air-defence and counter-drone systems, as well as in offensive drones and guided missiles.
- CSG also has a specific advantage: we come from a small country with a relatively small army. Export markets have always been essential for us. This has made us flexible, customer-oriented and able to adapt to the needs of armed forces and security organisations around the world.
- The security environment is changing rapidly, and we must adapt just as quickly as our customers, most of whom are the armed forces and security services of NATO countries and allied nations.
